Thursday, February 12, 2015

News: G-20 Slams IMF over Delayed Reforms

This is a story we continue to follow. The G-20 expresses deep disappointment and frustration with the IMF for the slow pace they are on to move forward the 2010 governance reforms. This article talks about it. Below are some quotes and then some comments.


"The Group of 20 leading and developing nations reiterated its dissatisfaction over the pace of the International Monetary Fund’s governance reform and urged the United States to ratify an agreement that would provide broader representation to developing countries, a draft communique of G-20 finance ministers and central bank governors said Tuesday."

"We stay deeply disappointed over continued delays in progress of the IMF’s governance and quota allocation reforms agreed in 2010," the document stated."

"Currently, awaiting ratification in the U.S. Congress, the United States has failed to make good on a reform that if enacted would  increase the size of the IMF’s core source of funding and increase the representation of emerging market and developing countries at the IMF in order to reflect accurately reflect their weight in the global economy."

"Considering the importance of these reforms to keep trust for the IMF, its legitimacy and efficiency, we confirm that their quickest implementation remains a priority for the fund. We continue urging the United States to ratify the 2010 reform as soon as possible," the draft communique said."

"The changes to the voting shares, known as quotas, cannot proceed without the United States, which holds the only controlling share of IMF votes."   . . . . .
My added comments:

I guess this G-20 pressure may be why the IMF allowed anonymous sources to release this information to Reuters the other day indicating the IMF has met to try and figure out how to move forward on the reforms without the US Congress. They have even discussed at least one way that would bypass the US veto power at the IMF (at least temporarily).

The IMF had some positive news related to its new aid plan for the Ukraine and there are at least some signs that Greece may eventually cut a deal to stay in the EU (and work with the IMF). But the pressure at the IMF has to be pretty intense right now. They are taking a big risk adding another $17 billion to the Ukraine package. Greece is still unresolved. Failure there could create massive problems in world markets. And they have the G-20 breathing down their necks about the slow pace on these reforms. They have a lot on their plate.

How these huge issues get resolved is probably gong to tell us if the IMF can emerge into a global central bank entity like Jim Rickards has been forecasting. This is why these issues are so important and why we continue to cover them here in a different way than the mainstream media does. We see these events as connected in terms of giving the IMF prestige the boost it would need to function like Jim Rickards talks about if we get another big global financial crisis.

It doesn't matter whether you think the IMF functioning in that role would be a good thing or a bad thing. What matters is what actually does happen. What actually does happen is going to determine what kind of monetary system change that takes place. What actually happens to the monetary system is going to impact all of us. We need to understand it in order to be able to prepare for any changes that may happen. 

Even if nothing changes for a long time, it is still important to follow these issues because whenever change does come, it will probably mean the end of the US dollar as the sole global reserve currency. That will impact the purchasing power of every person who uses US dollars, perhaps significantly. There may not be a more important financial issue to be informed about in our lifetime. The better informed we are, the better decisions we can make. That is why we are following this so closely here. And why readers here need to as well.

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